Reappraising Japan-U.K. ties

LONDON – The results of the recent British referendum in favor of leaving the European Union call for a reappraisal of British interests in relation to Japan. These can, in my view, be summed up in the following oversimplified terms.

Japan remains an important trading partner for Britain and significant source of investment in manufacturing and finance. Britain, accordingly, needs a prosperous and politically stable Japan. It is a vital British interest that Japan should remain outward-looking and liberal in its trade policies. Britain, too, must remain open and renew its efforts to encourage and welcome Japanese investment.

Continuing Japanese prosperity hinges on the success of Prime Minister Shinzo Abe’s economic policies (Abenomics). So far success has been limited. Abe’s third arrow, which aims at modernizing Japanese business practices and removing anti-competitive barriers, has so far had only modest results. If Japan is to maintain outward-looking trade policies, more needs to be achieved.

While Japan may face a trade deficit in the future as its society ages and its population declines, it is important for Japan’s future trade and economic relations that the outdated mercantilist attitudes and policies adopted by Japan in the postwar era are buried forever. Trade friction can only be avoided if economic relations are handled in a liberal and open manner, and not seen as a point-scoring game.

Britain cannot negotiate or conclude a trade agreement with Japan while it remains in the EU, but consideration should be given to the possibility of a bilateral arrangement based on the draft Japan-EU Economic Partnership Agreement, which is currently nearing conclusion.

The maintenance and development of Japanese manufacturing investments will inevitably depend to a considerable extent on the arrangements that Britain can agree with the EU. The closer these are to full participation in the single market, the better. Until the nature of the sort of arrangement that will replace Britain’s membership of the EU is made clear, the greater the uncertainty for Japanese companies and the greater the likelihood that they will place new investments elsewhere in the EU.

Japanese banks and securities companies are likely to maintain their positions in the London market so long as London remains a key financial center in Europe, but the Japanese commitment to London would be firmer if financial passporting rights in the EU can be guaranteed.

Britain and Japan have important civil aviation and shipping industries, and the rights of these industries will need to be guaranteed in any future Anglo-Japanese negotiations.

Britain and Japan have key roles in meeting the challenges posed by climate change and cooperation in this area should be intensified.

Scientific and technological exchanges will continue to play an important part in our relations. Joint research and development projects are essential elements in investment decisions and need to be strengthened. British withdrawal from the EU must not be allowed to jeopardize these cooperative arrangements.

When Britain ceases to be a member of the EU, bilateral political relations will become even more important. Ministerial visits will continue to provide important opportunities for high level exchanges as will membership of international groupings such as the Group of Seven.

Britain, as a nuclear power with a permanent seat on the U.N. Security Council, will remain a significant partner for Japan, especially at the United Nations and in nuclear issues.

Japanese defense forces can play an important stabilizing role in the Far East in cooperation with the United States. Britain accordingly attaches importance to the maintenance of Japan’s defense arrangements with the U.S.

Britain recognizes the threat to Japan from North Korea and understands Japanese concerns. It has no illusions about the North Korean regime.

Britain understands Japanese anxieties over Chinese actions in the South China Sea and of anti-Japanese demonstrations in China. It is a major British interest that these do not lead to conflict. The British accordingly attach importance to the development of a peaceful modus vivendi between China and Japan.

Britain also attaches importance to good relations between Japan and South Korea as well as with the countries of Southeast Asia.

Both Britain and Japan are significant aid donors and should continue to work closely together in aid matters.

Good economic and political relations depend on mutual cultural understanding. The British Council’s activities in Japan make a valuable contribution and the Japan English teachers scheme provides essential backing to English-language study in Japan.

In Britain, the Japan Foundation and organizations such as the Japan Society, the Daiwa Foundation, the Great Britain Sasakawa Foundation and the Sainsbury Institute for the Study of Japanese Arts and Cultures make useful contributions to understanding of Japan. Their work should be strengthened next year with the establishment of a Japan center in London. Japanese studies in Britain have made significant progress in recent years and more young British people are taking up the study of Japan, its language and culture. But there is considerable room for improvement in wider British understanding and knowledge of modern Japan.

An important element in Britain’s relations with Japan is Japan’s image in Britain. This has improved in recent years as more British people visit Japan and meet Japanese people in Britain and other countries. Japan is seen as a safe and orderly society and parliamentary democracy. The Emperor has won much respect. The resentments arising from the behavior of Japanese Imperial forces during the last war have been largely buried.

Concerns, however, remain, especially among those directly or indirectly involved with Japan, about right-wing elements in Japan’s governing party. The security laws are regarded with suspicion and visits to Yasukuni Shrine by influential politicians are liable to arouse fears of an attempt to revive state Shinto.

Any attempt to force through constitutional amendments, whether of Article 9 or of other provisions in the 1946 Constitution, could revive wartime memories and raise fears about a revival of Japanese nationalist extremism. The majority in the British political establishment remains liberal in outlook and firmly committed to upholding human rights.